G.R. No. L-5739; June 30, 1954
VICENTE SANTANDER, et al., plaintiffs-appellants, vs. PACIFICO DE LA SERNA, defendant-appellee.

FACTS

On May 19, 1950, plaintiffs Vicente Santander and the children of the deceased Fortunata Villiniso filed a complaint against defendant Pacifico de la Serna in the Court of First Instance of Cotabato. Under the first cause of action, they alleged ownership of a homestead parcel acquired from the Government, with a patent issued on July 26, 1937. On April 30, 1940, Vicente Santander and his wife Fortunata Villiniso obtained a loan of P370 from the defendant, secured by a mortgage on improvements on a 12,406-square-meter portion of the homestead. Due to the war, plaintiffs failed to pay, and the defendant never foreclosed. In 1947, plaintiffs offered to redeem, but defendant refused. Under the second cause of action, plaintiffs claimed that on March 2, 1946, Vicente Santander executed a deed of sale covering approximately 15,000 square meters of the homestead (the same mortgaged portion) in favor of the defendant for P470, which sale was allegedly procured by fraud and was inoperative for lack of approval by the Secretary of Agriculture and Natural Resources. Under the third cause of action, plaintiffs asserted that defendant possessed 14,365 square meters, exceeding the mortgaged area by 1,859 square meters, and that the deed of sale could not affect the children’s rights as it was executed by Vicente Santander alone after Fortunata Villiniso’s death. They sought judgment to compel defendant to accept P370 in satisfaction of the mortgage and return the land, annul the 1946 deed of sale or allow repurchase under Act No. 141 , and pay P500 damages.
The defendant, in his answer dated June 6, 1950, denied the material allegations and asserted as a special defense and counterclaim that the 1940 loan was secured by a mortgage on improvements; that in 1946, plaintiffs insisted on selling the mortgaged portion, leading to the execution of the deed of sale on March 2, 1946; that defendant then took possession and introduced improvements worth P30,000; that the land’s value had increased to P15,000; and that plaintiff Vicente Santander could not repurchase under Section 119 of Act No. 141 due to speculative ventures. Defendant prayed for dismissal of the complaint, validation of the deed of sale, surrender of the owner’s duplicate certificate for annotation, and, if repurchase were allowed, payment of P15,000 as repurchase price plus P30,000 for improvements.
The case was submitted without evidence, based solely on the complaint and answer. On September 25, 1951, the trial court ordered the cancellation of the 1946 deed of sale, directed plaintiffs to pay defendant P30,000 for improvements made in good faith, and recommended to the Director of Lands that steps be taken to cancel Vicente Santander’s homestead patent and give preferential rights to qualified buyers under the Public Land Law. Only the plaintiffs appealed, assigning error solely to the portion ordering them to pay P30,000 for improvements.

ISSUE

Whether the trial court erred in ordering the plaintiffs to pay the defendant P30,000 as the value of improvements introduced on the land, in the absence of evidence supporting such valuation.

RULING

Yes, the trial court erred. The Supreme Court modified the appealed judgment by eliminating the directive for plaintiffs to pay P30,000. Under Section 8, Rule 9, and Section 1, Rule 11, of the Rules of Court, material averments in the complaint (other than damages) are deemed admitted if not specifically denied, and new matters in the answer are deemed controverted if no reply is made. Here, the plaintiffs did not admit the defendant’s allegation regarding the P30,000 value of improvements. Since no evidence was presented to prove this amount, the defendant was not entitled to a judgment for damages. The Supreme Court also noted that the defendant did not appeal the trial court’s decision, so his claim in his brief that the repurchase price should be P15,000 (the current market value) instead of P470 (the sale price) could not prosper. The Court further agreed with appellants that the trial court’s critical observations on Vicente Santander’s motives were unsupported by evidence and out of place. The modified judgment affirmed the cancellation of the 1946 deed of sale and ordered plaintiffs to pay defendant P470, with no award of damages for improvements. The decision was affirmed in all other respects, without costs.